CHAPTER ONE: AN OVERVIEW

INTRODUCTION:

Human Resource management belongs to all organizations. Its focal point is people; people are
the life blood of organizations. It emphasizes on human resources planning and development,
recruitment, selection of personnel, induction, placement, training and development; techniques
of performance appraisal; wage and salary administration and /or the human factor in work
design & compensation plans & incentive schemes, morale and motivation, discipline,
maintenance and safety, industrial relations, collective bargaining, grievances and grievance
handling. It also focuses on newly emerging issues of Human resource like diversity and its
management, empowerment, HIV AIDS and others.

1.1 Definition and Background

What is Human Resource Management?

Human Resource is one of the most important resources of an organization. It is one of the
factors of production other than land, capital and organization. There are some significant
differences of labor as compared to other factors of production.

 Human resources of an organization can be motivated.

 It is the only factor of production which produces more than its input.
 Human resources can produce synergic effect.
 Labor is mobile.
 It is the only resource which gains more knowledge and skilled in the long run, where
as other factors goes on depleting.

Human Resource Management (HRM) is the basis of all management activity. The basis of
management is always the same which is getting the people of the business to make things
productive. Hence, effective human resource management is now so crucial for success, many
organizations regard HRM as the responsibility of all managers, not just specialists in personnel
management, as was often the case in the past.

From a strategic point of view, HRM policies and activities are designed to support and reinforce
more general business strategies and objectives.

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At an operational level, HRM is concerned with the design and implementation of procedures to
optimize the day-to-day management of people in organizations.

A key to a firm’s performance is its human resources (employees). Therefore, a firm’s

performance is dependent on how human resources are managed. The term human resource
refers to the sum total of all the inherent abilities, acquired knowledge, and skills represented by
the aptitudes, attitudes and talents of an organizational work force. The management of human
resources involves recruiting employees, developing their skills, and evaluating their
performance. Without effective employees, the organization produces its goods and services
inefficiently and may even place its survival at risk.

Personnel or human resource management addresses a set of functions or activities that are
designed to influence the effectiveness of an organization’s employees. These include
recruitment, staffing, training & development, integration/induction, compensation etc. Most
managers engage in these activities daily with prospective employees and their own
subordinates.

Some other definitions of HRM

 Human resource management is the performance of all managerial functions involved in

planning for recruiting, selecting, developing, utilizing, rewarding and maximizing the
potential of human resources of an organization. (Leon C. Megginson)
 Human resource management deals with the design of formal systems in an organization
to ensure the effective and efficient use of human talent to accomplish organizational
goals. (Mathis and Jackson)
 Personnel management is the planning, organizing, directing and controlling of the
procurement, development, compensation, integration, maintenance, and separation of
human resources to the end that individual, organizational and societal objectives are
accomplished.(Edwin B. Fllippo)
 Walton (1985) attempts to define HRM as it stresses mutuality between employers and
employees: Mutual goals, mutual influence, mutual rewards, and mutual responsibility.
Characteristics of HRM

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1. HR management is concerned with managing people at work and with their group
relationship.
2. It is concerned with employees, both as individuals and as a group and aim to achieve the
objectives personal contribution towards the goals.
3. HR management is concerned with helping the employees to develop their potentialities and
capacities to the maximum possible extent, so that they can derive great satisfaction from
their job.
4. Since recruitment, selection, development and utilization of an accommodation to people are
an integral part of any organized effort, HR management is inherent in all organizations.
5. HR management is of a continuous nature. It requires a constant alertness and awareness of
human relations and their importance in every day operations.
6. HR management attempts at getting the willing cooperation of the people for the attainment
of the desired goals.
7. Enhancing performance of employees in achieving goals.
8. Open channels of communication.
9. Goal orientation
10. Participation.

Nature and Scope of HRM

The field of HR management is undergoing transition because organizations themselves are

changing. As a result the terminology in the field is in transition. The central focus for HR
management must be on contributing to organizational success. HR management is composed of
several groups of inter related activities- HR planning and analysis, staffing, HR development,
compensation and benefits, health, safety and security, employee and labour management
relations. One of the most important shifts in the emphasis of HR management in the past few
years has been the recognition of HR as a strategic business contributor.

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 1.2 Importance (functions) of Human resource management

The HRM function contributes to the achievement of different dimensions of organizational

effectiveness. Human resource functions are tasks and duties that human resource managers
should perform. These are:
 Conducting job analysis
 Determining the nature of each employee’s job
 Establishing the specific requirements of each employee’s job within a firm.
 Planning human resources needs
 Forecasting the human resource requirements that the organization needs to
achieve its objectives.
 Developing and implementing a plan to meet this requirement
 Compensation (rewarding)
 Managing wages and salaries
 Designing and implementing incentives and benefits
 Ensuring that the compensations given to employees are fair and consistent.
 Appraising the performance of employees
 Designing systems for appraising the performance of individual employees.
 Labor relations management
 Serving as an intermediary between the organization and its union(s)
 Design discipline and grievance handling systems.
 Employee safety and health
 Designing and implementing programs to ensure employee safety and health.
 Recruiting job candidates
 Selecting the right person from job candidates
 Orienting the newly employed employees
 Training and developing employees
 Decision making on mergers, acquisitions and downsizing
 Redesigning organizations and work processes
 Attracting and retaining human resources

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 1.3 Evolution and Development of HRM

1930 1960 1990

Labour Personnel Human

Relations Management Resources

Evolution from Labor Relations to Personnel Management:

The employee was used as a social tool and the management was only concerned in

extracting work from each employee the work that was assigned to him. The workers

were recruited through a labour contractor. In many organisations it appears there was no

life tenure of guarantee or permanence of job to the individual employees. The

management utilized the knowledge and skill that was available with the individual

employee. During this period (Labor Relations Period, 1930-1960) there were no

avenues/institutions offering training for further advancement of knowledge, skills and

managerial abilities on the part of the employees. The training institutes either of a

general professional in nature or training wing either of the government or private

concerns were very few and also poorly equipped with resources and faculty in different

fields of training. In terms of incentives provided to the employees by the government or

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private organizations are almost very negligible. The realization of employee

development and the care that has to be taken in respect to the employees came rather

late. The awakening in respect of employees’ importance grew gradually in many of the

larger organizations throughout the world. The contact and interaction between the top

management and the workers felt to increase. These factors gave rise to emergence of

Personnel Management.

Evolution from Personnel to HRM:

The enlightenment on the part of workers has gradually changed the scenario in the

organizations. The day has come where the management has to bend and listen to the

workers. In a way, the management has to toe almost the views, ideas and challenges

thrown by workers. Of course, the scenario differs from organization to organization.

Over a period of three decades, because of multiple factors personnel management slowly

assumed a greater significance by 1960s.

Personnel departments were once called 'Health and Happiness' departments. The

people assigned to deal with personnel issues were often individuals who were passing

their time. The personnel department was seen as a place where less productive

employees could be placed with minimal damage to the organization’s ongoing

operations. Individuals in the personnel department were perceived as those responsible

for planning company picnics, vacation schedules and retirement parties. Personnel as an

activity, was seen as a necessary but unimportant, part of the organization.

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 Yet, as the field of management began to mature, more emphasis was being placed

on the workers. Various studies revealed that organizing workers for the work they had

done could influence their productivity. Workers were becoming more demanding in

what they wanted from a job and society, by means of laws and legislation. No longer

could the personnel department be treated as a detour on the road to success.

Organizations’ had to hire the best-qualified candidates without regard to race, religion,

sex, national or international. The individuals hired needed to be trained to function

effectively within the organization. Furthermore, once hired and trained, the organization

had to provide a means of continuing the personal development of each employee.

Practices were needed to ensure that these employees maintained their productive

affiliation with the organization. Finally, work conditions have to be established such

that the work environment induced workers to stay with the organization and

simultaneously attracted new applicants to the organization. Thus the importance to

HRM evolved.

While discussing the recognition of HRM, it is relevant here that we look into the

differences between the traditional personnel approach and the human resource approach.

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 Differences between Traditional Personnel management and HRM

Traditional Personnel Approach Human Resource Approach

Planning & Strategy Formulation

 Is involved in operational planning  Participates in formulating organizational

only. strategic plan and aligning HR functions with
company strategy.

Authority

 Medium status and authority (e.g.  High Status and authority (e.g. Vice President
Personnel Director) for Human Resources)

Scope

 Concerned primarily with hourly,  Concerned with all managers and employees.
operational, and clerical
employees.

Decision Making

 Makes operational decisions only  Participates in strategic decisions

Integration

 Moderately integrated, at best,  Fully integrated with other organizational

with other organizational functions functions, such as marketing, finance, legal
and production.

Coordination

 Coordinates a subset of human  Coordinates all human resource activities.

resource activities

1.4. Human Resource management objectives

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Manager's and human resource department achieves their purpose by meeting objectives.
Objectives are benchmarks against which actions are evaluated. Human resource objectives
reflect the intention of senior management and must balance the challenges from the
organization. The role of the human resource functions is explained by identifying the key
objectives to be achieved. Four objectives form the foundation of all HR activity.

A) Staffing objectives

Human resource managers are first concerned with ensuring that the business is
appropriately staffed and thus able to draw on the human resources it needs. This
involves designing organization structures, identifying under what type of contract different
groups of employees (subcontractors) will work, before recruiting, selecting
and developing the people required to fill the roles: the right people, with the right skills
to provide their services when needed.

There is a need to compete effectively in the employment market by recruiting and retaining the
best, affordable workforce that is available. This involves developing employment packages that
are sufficiently attractive to maintain the required employee skills levels and, where necessary,
disposing of those judged no longer to have a role to play in the organization. The tighter a key
employment market becomes, the harder it is to find and then to hold on to the people
an organization needs in order to compete effectively. In such circumstances increased
attention has to be given to developing competitive pay packages, to the provision of
valued training and development opportunities and to ensuring that the experience of
working in the organization is, as far as is possible, rewarding and fulfilling.

B) Performance objectives

Once the required workforce is in place, human resource managers seek to ensure that
people are well motivated and committed so as to maximize their performance in their
different roles. Training and development has a role to play, as do reward systems to
maximize effort and focus attention on performance targets. In many organizations, particularly where
trade unions play a significant role, human resource managers negotiate
improved performance with the workforce.

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The achievement of performance objectives also requires HR specialists to assist in disciplining
employees effectively and equitably where individual conduct and/or performance standards are
unsatisfactory. Welfare functions can also assist performance by providing constructive
assistance to people whose performance has fallen short of their potential because of illness or
difficult personal circumstances.

Last but not least, there is the range of employee involvement initiatives
to raise levels of commitment and to engage employees in developing new ideas. It is
increasingly recognized that a key determinant of superior competitive performance is a
propensity on the part of an organization’s employees to demonstrate discretionary effort.
Essentially this means that they choose to go further in the service of their employer than
is strictly required in their contracts of employment, working longer hours perhaps,
working with greater enthusiasm or taking the initiative to improve systems and relationships.
Willingness to engage in such behavior cannot be forced by managers. But
they can help to create an environment in which it is more likely to occur.

C) Change management objectives

A third set of core objectives in nearly every business relates to the role played by the
HR function is effectively managing change. Frequently change does not come along in readily
defined episodes precipitated by some external factor. Instead it is endemic and
well-nigh continuous, generated as much by a continual need to innovate as from definable
environmental pressures. Change comes in different forms. Sometimes it is merely
structural, requiring reorganization of activities or the introduction of new people into
particular roles. At other times cultural change is sought in order to alter attitudes,
philosophies or long-present organizational norms. In any of these scenarios the HR
function can play a central role. Key activities include the recruitment and/or development of
people with the necessary leadership skills to drive the change process, the
employment of change agents to encourage acceptance of change and the construction
of reward systems which underpin the change process. Timely and effective employee
involvement is also crucial because ‘people support what they help to create’.

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 D) Administration objectives

The fourth type of objective is less directly related to achieving competitive advantage,
but is focused on underpinning the achievement of the other forms of objective. In part
it is simply carried out in order to facilitate an organization’s smooth running. Hence
there is a need to maintain accurate and comprehensive data on individual employees, a
record of their achievement in terms of performance, their attendance and training
records, their terms and conditions of employment and their personal details.

However, there is also a legal aspect to much administrative activity, meaning that it is done
because the business is required by law to comply. Of particular significance is the
requirement that payment is administered professionally and lawfully, with itemized
monthly pay statements being provided for all employees; There is also the need to make
arrangements for the deduction of taxation and national insurance, for the payment
of pension fund contributions and to be on top of the complexities associated with
Statutory Sick Pay and Statutory Maternity Pay, as well as maternity and paternity
leave.

HR professionals often downgrade the significance of effective administration, seeking instead to

gain for themselves a more glamorous (and usually more highly paid) role formulating policy
and strategy. This is a short-sighted attitude. Achieving excellence (i.e. professionalism and
cost effectiveness) in the delivery of the basic administrative tasks is important as an
aim in itself, but it also helps the HR function in an organization to gain and maintain
the credibility and respect that are required in order to influence other managers in the
organization.